VMware Reprices Stock Options

By Erik Sherman

Updated on: July 21, 2008 / 7:46 PM
/ MoneyWatch

VMware, whose stock value has dropped 65 percent from its $124.83 peak in October, is seeking shareholder approval to reprice its stock options, according to the Financial Times (sorry, the article requires a paid subscription). The board has already approved the move.

Shareholders could turn the request down, because it means that money has to come out of company pockets -- which, to investors, means their pockets -- to fund the change. But it's hard to see how there is much of a choice if the company wants to remain competitive and, perhaps, gain back some of its market value. If the options have tanked in value, there is less financial incentive for inventive employees to remain. It's one of those cases where stockholders either take it in the shorts a bit now, or face real pain as the very people who can get them out of trouble walk off to another opportunity.

Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.